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Biotech / Medical : Guidant (GDT)
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To: Lighthouse who wrote (198)7/19/2002 11:28:00 AM
From: Lighthouse  Read Replies (1) of 235
 
Now that was a strong quarterly report!

The ICD numbers were awesome. I now get apx. $2.08 for EPS this year. Saying the EPS are going up is only meaningful to me if the company has a good cash conversion ratio, GDT does, so rises in EPS mean higher free cash flows (which is all I care about).

In my models I take stent sales to $400 M in 2003 and $0 M in 2004 as a base case. (The current run rate for stents is $1,000 M) Even so the DCF comes out higher than the current price. What the hell are these "analysts" looking at? Where do you slap a "hold" rating on this company at $28?

Noteworthy to me on the conference call were two facts.

One: The balance sheet is now net cash about $200 Million. Q3 and Q4 will make this number rise further.

Two: But they are not announcing a stock buyback, even at these lower levels. Hmmmmmmmmm. Wonder why they want to hold cash?

If Cook/GDT cannot use the data derived from their paclitaxel studies so far (to be determined by the courts in August), then I bet GDT makes a big buyback announcement.

If Cook/GDT is allowed to use the data, I look for GDT to buy Cook. Dilutive yes - but so what. If I were in GDT's shoes I would pony up and buy Cook.

Just one suckers opinion. Please be careful what you read on these forums - it is almost as bad as what you read from many Wall Street analysts.
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